How to Value a Business in Pattaya

The first thing I look at when a business comes up for sale is the numbers.

Checking the accounts

The numbers I see are usually internal accounts, so you have to be careful with them. Most small businesses here don't have audited books you can rely on.

With a restaurant and bar I can judge the figures from experience. If I know what a place takes in turnover, I have a good idea of what it should make in profit, and I can usually see where there's room for improvement. If you don't have that experience, treat the accounts with caution.

As a rough guide, a typical restaurant and bar here makes about 10% profit on turnover. A really good one makes 15 to 20%. If the accounts show a lot more than that, ask why.

Why are they selling?

This matters as much as the numbers. If the owner plans to stay in Pattaya, it's reasonable to assume they won't try to rip you off. It isn't worth their reputation in a town this size. If they're leaving the country and won't be around afterwards, you need to be more careful. Weigh it all up.

What I pay: two to four times annual profit

I work on a multiple of two to four times annual profit. Where a business sits in that range depends mainly on how long it has been trading.

The longer a business has been going, the bigger its customer base usually is and the more it has proved it can last. A place that's been trading for many years is worth closer to four times profit. A newer one, with less of a track record, is worth closer to two.

This is part of my series on buying a business in Pattaya: why buy rather than start, how to value a business, leases, landlords and paperwork and taking over: the first few months. For the basics, including foreign ownership rules, read starting or buying a business in Pattaya.